Delhi High Court
Ece Industries Ltd. vs Macneill And Magor Ltd. on 14 March, 1996
Equivalent citations: 62(1996)DLT181
Author: K. Ramamoorthy
Bench: K. Ramamoorthy
JUDGMENT K. Ramamoorthy, J.
(1) This is a suit for ejectment. On 6.9.1993 the following issues were framed for trial : 1. Whether the plaintiff is not entitled to maintain the suit. 0.P. defendant. 2. Whether the tenancy of the defendant has been terminated by a valid notice? O.P. Parties. 3. Relief.
(2) Arguments were advanced on the preliminary issue framed by this Court on the maintainability of this suit.
(3) The case of the plaintiff aversely stated is as follows:
(4) The first floor of the main building known as Ece House at 28, Kasturba Gandhi Marg, New Delhi, measuring 11,568 sq. feet of covered area belonged to the plaintiff. On 15.6.1976 the same area was let out to the defendant at a monthly rent of Rs. 58,996.80 (at Rs. 5.10[ per sq. feet of the covered area). Since then the defendant has been in occupation of the premises as tenant and paying the rent regularly.
(5) On 27.11.1990, a notice under Section 106 of the Transfer of Property Act, was sent on behalf of the plaintiff to the defendant terminating the tenancy. Again on 31.5.1991 a notice was sent terminating the tenancy. The defendant sent a reply dated 12.6,1991 repudiated the claim of the plaintiff.
(6) In para 4 of the plaint the plaintiff has stated thus " the plaintiff admits that it had entered into an agreement of sale with several persons covering the entire area of the first floor". In para 5 about the collection of rent from the defendant the plaintiff would state as follows: "HOWEVER,the defendant has continued to pay rent of the entire premises to the plaintiff and the plaintiff alone continued to be the landlord of the said premises qua the defendant and is entitled to institute the present suit and receive rent and recover possession of the premises from the defendant".
(7) According to the plaintiff the Rent Control Act was amended with effect from 1.12.1988 and by which the premises fetching rent over and above Rs. 3500.00 p.m were taken out of the purview of the Act. Therefore, the rent of the first floor was being more than Rs. 3500.00 p.m, the Rent Control Act, 1958 would not apply to the premises and, therefore, the plaintiff is well within its rights in filing the suit.
(8) The Defendant filed the written statement on the 25th March, 1992. According to the defendant the suit as framed is not maintainable. The plaintiff in or about 1976 had entered into an agreement for sale in favour of various parties. The agreement (vendee) had been put in possession of their respective shares by the plaintiff directing the agreement (vendee) to collect the proportionate rent share from the defendant on behalf of agreement vendees. In paras 2 and 3 the defendant put his case which are as follows: Para 2-The plaintiff has, in pursuance of the aforesaid written agreements for sale entered into in or about 1977 with the aforesaid transferees, put the aforesaid transferees into formal possession of their respective flats on the first floor of the suit premises, as mentioned hereinabove and the abovementioned transferees have become entitled to receive rents from the defendant in respect of their respective office flats at the agreed rate of Rs. 5.10 per sq. ft. For the sake of convenience, the plaintiff has been entrusted by the aforesaid transferees to collect rents from the defendant on their behalf and after deducting the service charges, house taxes and insurance premiums, the plaintiff is to make over the respective amounts of rents to the aforesaid transferees in respect of their respective office flats. The plaintiff at the material time and at the time of institution of this suit was and is not owner or landlord of the suit premises and is not entitled to maintain the suit. Para'3-Collection of rent and issue of rent receipt by the plaintiff is matter of internal arrangement between the plaintiff and the aforesaid transferees, who are treated as owners of their respective flats, as aforesaid even by the plaintiff. The arrangement of collection of rent and issue of rent receipt by the plaintiff have been made only as a matter of convenience and the plaintiff has been acting as collecting agent of the aforesaid parties."
(9) The defendant has also stated that the plaintiff has not been authorised to file the suit by the transferees. The defendant had already started negotiations with some of the agreements (vendees) for entering into agreement for sale. The plaintiff has been collecting rent as an agent of its disclosed principals namely the transferees and this fact was known to the defendant. According to the defendant the Rent Control Act, 1958, will apply because the rent has to be calculated with reference to the each of the transferees. In the alternative the Delhi Rent Control Act (Amendment), 1988 is challenged by the defendant in the written statement.
(10) The plaintiff has filed the letter dated 1.6.1976, written by the plaintiff to defendant as Exhibit P-1, mentioning the terms and conditions of the lease. The plaintiff filed a notice dated 27.11.1990 as Exhibit P- 2. The plaintiff marked as Exhibit p-3 a notice dated 31.5.1991. The reply dated 12.6.1991 has been marked by the plaintiff as Exhibit P-4. The postal acknowledgement receipt and A.D. card for the letter dated 10.9.1991 is marked as Exhibit P-5. The letter dated 10.9.1991 from the Counsel for the plaintiff is marked as Exhibit P-6.
(11) The plaintiff did not file the agreement between the plaintiff and third parties for the sale of portion in the first floor. The defendant called upon the plaintiff to file those documents and the plaintiff thereupon had filed the copies of the agreements for sale.
(12) In the light of the pleadings the preliminary issues were framed by this Court and the learned Counsel for the plaintiff invited a decision on these issues. According to him a finding on the preliminary issues would dispose of the suit.
(13) The learned Senior Counsel for the defendant Mr. Arun Jaitley submitted that the defendant would have to lead an evidence on certain material facts and, therefore, the trial of the case is necessary.
(14) The learned Counsel for the plaintiff insisted on the disposal of the preliminary issues on the basis of the material available on record and, therefore, I requested the learned Counsel for the plaintiff to advance arguments. That is how I now come to decide the preliminary issues.
(15) The learned Counsel for the plaintiff contended though it is admitted by the plaintiff that it had received the full consideration from the agreement (vendee) though possession has been given to the agreement (vendee), the plaintiff has been authorised by the agreement (vendee) to collect the rent from the defendant only on their behalf, the sale deed with reference to the portion had not been executed by the plaintiff in favour of the agreement (vendee) and, therefore, the title to the property remains with the plaintiff and, therefore, the plaintiff is entitled to maintain the suit for possession after issuing notice to quit.
(16) The learned Senior Counsel for the defendant Mr. Arun Jaitley submitted that the plaintiff cannot be said to be a landlord vis-a-vis the defendant and it is only an agent for collecting the rent on behalf of the transferee and, therefore, the plaintiff is not competent to maintain the suit.
(17) The learned Counsel for the plaintiff relied upon the judgment of the Supreme Court in Badri Narayana v.Ramshwer Dayal, .In that case the purchaser of a fractional share in the whole interest claimed a merger of his interest and, therefore, sought to defeat the right of the remaining persons who are entitled to the remaining shares. The Supreme Court held "it, however, seems to us that there was no scope for the application of the doctrine of merger to the facts disclosed by the plaintiff in their plaint. If the lessor purchases lessee's interest the lease no doubt is extinguished as the same man cannot at the same time be both a landlord and a tenant but there is no extension of the lease if one of the several lessee purchaser only a part of the lessor interest. In such a case the leasehold and the reversion cannot be said to coincide."
(18) I fail to see how this case helps the plaintiff. The case of the plaintiff is that the title is still with the plaintiff and the vendee has not become the owner of any fractional share. Therefore, no assistance can be had from the decision of the Supreme Court above referred to for the plaintiff. The learned Counsel for the plaintiff relied upon the decision of the Allahabad High Court in the case of Shambhoo Dayal v. Chandra Kali Devi and Ors., . A Single Judge of the Allahabad High Court held on the facts of that case - "THE exercise of the right of ejectment of the tenant in chief in accordance with law (subject to any special restrictions) is inherent in ownership, and there is no law that a sub-tenant who has acquired the rights of the landlord by purchase cannot exercise these rights of ownership because of his previous status as sub-tenant. As such a sub-tenant derives the rights of ownership from the previous owner, the argument that a sub-tenant's rights as the new owner do not include the right to eject the tenant-in-chief amounts to saying that the previous owner could not pass all incidents of ownership to a subtenant. The tenant-in-chief cannot claim to reduce the inherent rights of his landlord, as owner, to transfer the property to whomsoever he likes, including a sub-tenant, on the plea that any transfer of ownership to the sub-tenant will be subject to his paramount rights under the sub-tenancy. His rights as a tenant-in-chief cannot be paramount over those of landlord as an owner, and to restrict the exercise of rights of a transferee of the owner because he was previously a sub-tenant is to restrict the rights of transfer of the owner from whom the sub-tenant derives his title."
(19) Learned Counsel for the plaintiff relied upon the decision of the Madras High Court in B. Kupulal v. D. Sagunthala and Anr., 1987(2) All India Rent Control Journal 314 . The Madras High Court held that the agreement to sell the demised property would not transfer title to the agreement (Vendee). In that case the tenant relied upon an oral agreement for sale in answer to the claim for eviction under the Tamil Nadu Rent Control Act, 1960.
(20) Per contra learned Sr. Counsel Mr. Arun Jaitley relied upon the meaning of the word landlord and contended that the plaintiff is not receiving the rent as a landlord from the defendant,he is receiving the rent as authorised by the agreement (vendee) and, therefore, by virtue of Section 109 of the Transfer of Property Act, 1882, the transferees are the persons who would be competent to maintain the suit. Section 109 of the Transfer of Property Act, 1882 reads as follows : If the lessor transfers the property leased, or any part thereof, or any part of his interest therein, the transferee, in the absence of a contract to the contrary, shall possess all the rights, and, if the lessee so elects, be subject to all the liabilities of the lessor as to the property or part transferred so long as he is the owner of it; but the lessor shall not, by reason only of such transfer, cease to be subject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him. Provided that the transferee is not entitled to arrears of rent due before the transfer, and that, if the lessee, not having reason to believe that such transfer has been made, pays rent to the lessor, the lessee shall not be liable to pay such rent over again to the transferee. The lessor, the transferee and the lessee may determine what proportion of the premium or rent reserved by the lease is payable in respect of the part so transferred, and, in case they disagree, such determination may be made by the Court having jurisdiction to entertain a suit for the possession of the property leased.
(21) According to learned Senior Counsel once the transfer had taken place the right of the transferor with reference to the subject matter of the transfer would come to an end and the plaintiff cannot call himself as a lessor and then come forward with the suit for possession. The Section begins by saying " if the lessor transfers the property", therefore Section 109 will apply only if there has been a transfer of the property to the tenant.
(22) Learned Senior Counsel relied upon the judgment of this Court in Sugar Apartments flat owners Society (Regd.) v. M/s Sequoia Construction (P) Ltd. & Ors., . This Court dealt with the Delhi Apartment ownership Act, 1986 and dealing with the non-execution of the Deeds of Apartment by the promoters under Section 13 of the Act, the learned Judge held : So far as the question of non-execution of the deeds of Apartment is concerned, the plaintiff submit that as per Section 13 of the Act, the responsibility is cast on the promotor to do the needful. It is further submitted that the plaintiffs have done whatever they were required to do under the Act inasmuch as they have paid the entire sale consideration. Therefore, no fault can be attributed to the plaintiffs regarding non-execution of the Deeds of Apartment. On the other hand, it is submitted on behalf of Defendant No. I that the non-execution of the Deeds of Apartment is because of the fact that the Competent Authority under the Act has not been notified by the Government so far. In other words, the defendant No. 1 also claims to be not at fault in the matter of non-execution of the Deeds of Apartment, it follows from this that neither party can be blamed for non-execution of the Deeds of Apartment. However, non-execution of the Deeds of Apartment can not be taken as giving licence to the promotor/builder to go on and with additional construction in the building so as to defeat the rights and interest of the apartment owners/allotters in the existing building complex. The question remains should the promoter/ builder be allowed to take advantage of this situation for which in any case the plaintiffs are not responsible? A reference to the provisions of Section 13 of the Act and Rules, 1987 shows that in the Deeds of Apartment the description of the common areas and facilities and the percentage of undivided interests appertaining to the apartment in the common areas and facilities, the description of the multi-storeyed building with number of storeys and basements, number of apartments in the building etc. has to be given. The sanctioned plan of the building has to be annexed. These provisions show that the intention of the statute is that on execution of Deeds of Apartment, the state of the building is frozen, the rights and interest of the apartment owners in the building get crystalised so that in future there is no scope for manoeuvre. From Section 6 of the Act when it ensures that the promoter gets full consideration for sale of the apartments, it would follow that after payment of full consideration there should be some protection or safeguards for the rights of apartment owners/ allottees. The non-execution of the Deeds of Apartment should not mean that the building as well as the rights of the existing apartment owners remain in a fluid stage. The builder may keep on adding floors after floors and apartments after apartments so as to satisfy its greed for money and thereby adversly affect the right of the existing apartment owners in the common areas and facilities and also increase the burden on the foundations of the building. As already noticed admittedly the burden obtained a completion certificate with respect to this building in the year 1979 after constructing the building as per the existing sanctioned plan. The builder also admittedly exhausted and achieved the maximum permissible Far at the relevant time. Contemporaneously, all the apartments were also sold, sale consideration realised and possession delivered. For all practical purposes, the project was complete and over at that stage. In the year 1986, the Delhi Apartment ownership Act was enacted and it came into force in the year 1988. After the enforcement of the Act, the provisions creating interest of the apartment owners in the common area and facilities have to be honoured. The promoter has for its own reasons not carried out the additional construction for about 10 years. No that the statute is in force, the builder can not be permitted to act in violation thereof.
(23) The Learned Judge was dealing with the Interlocutory Application and the learned Judge has also observed in para 26 that what he had referred to above was a prima fade view. This decision cannot be relied upon as a precedent for the proposition that the agreement (Vendee) would get title to the property, without a sale deed duly registered.
(24) The learned Senior Counsel brought my attention to the decision of this Court reported in Smt. Balquis Jehan Begum v. Sihghatulla and Am., 1971 R.C.R. 95. This Court has held: "The mere physical fact of receiving rent, without anything more would not make the person who receives it the landlords of the premises. There must be a right to receive it". This case, in my view is not of any help to the defendant at all.
(25) Learned Senior Counsel brought to my notice the decision of the Madras High Court in Manikham Pillaiv.RathnasamiNadar and Ors. Air 1919 Madras 1186. The Madras High Court noticed the fact in the following terms : Two points have been raised before us by the appellant in this case:-(1) that Ext. A, the muchilika given by the plaintiff, is not valid as it was agreed to only by one of the trustees of the plaint temple and not by the other, (2) that the defendant has a monthly tenancy apart from the lease, Ext. Ii and that it has not been properly terminated, as the notice to quit given to him was not by his lessors or on their behalf but by the plaintiff himself and in his own name. On the first point we agree with the District Judge that the muchilika. Ex. A is valid and binding on the temple, as it was taken in accordance with the usual practice of the temple by the managing trustee in the names of both the trustees. Though the ordinary rule is that when there are more trustees than one, all most (oin in the execution of the trust and that one trustee cannot delegate any of his duties to his co-trustee, yet the delegation in the regular course of business is not improper. Compare Sees. 47 and 48, Trusts Act, which state the principles though they do not apply to the present case. As it is shown that in the ordinary course of business, the leases of the plaint temple properties were arranged by the managing trustee on behalf of both the trustees, the muchilika Ex. A executed in accordance with that practice, the other trustee not objecting, must be held to be valid. On the second point the Madras High Court held that the defendant position was that a tenant at will liable to be ejected without notice. The argument was that the notice was given in that case though admitted to be otherwise proper was argued to be in valid as it was not given by the lessee or on their behalf. The Court further noticed that the notice was given by the plaintiff in his own name. In deciding this point the Madras High Court has observed as follows : The English law, as pointed out by the respondents Vakil, is that the person legally entitled to the immediate reversion of and in the demised premises is the proper person to give the notice to quit. See Foa on Landlord and Tenant, Edn. 4 p. 163, and Woodfall on landlord and Tenant, Edn. 19, P 408. Where the landlord had given a 14 years lease of his premises in the possession of a yearly tenant to a new lessee, it was held that the new lessee was the proper person to give the notice to quit and the notice given on the landlord's behalf was held to be bad in law. See Wordsley Brewery Co. b. Hal ford (I). We must adopt this rule, unless the Indian law under the Transfer of Property Act is clearly different. Although the matter is not free from difficulty we are inclined to think that the provisions of that Act are not inconsistent with the English rule. It is true, Section 106 of that Act contemplates that the notice is to be given by the lessor or by an authorised agent on his behalf. That no doubt is the primary rule. But Section 109 enacts that the transferee of any part of a lessor's interest in the property is entitled to all the rights of the lessor as to the property or part transferred. The words 'transferee of any part of his (the lessor's) interest" therein (i.e. in the property) are wide enough to include a term lessee like the plaintiff with a lease for 20 years. No doubt Section 105 in defining a lease does not use the words "interest in property" as in Section 58 in defining a mortgage. Nevertheless a "right to enjoy the property" which are the words used in Section 105 is an interest in the property. In English law it is treated as an assignment of the reversion when the property is already in a lessee's possession. It was also argued that the rights referred to in Section 109 and no more. But the words used are "all the " and the expression is very comprehensive. There does not seem to be any reason why the words should be held not to include the right to recover possession by terminating the tenancy of a previous lessee by giving the necessary notice to quite. That is one of the rights of the lessor "as to the property" transferred. Prima facie a person entitled to possession should have the right to reduce the property into possession. To hold in favour of the appellant's argument will lead to the anomaly of having to hold that a transferee of the property leased could though under Section 109 he becomes entitled to be paid the rent due from the date of his transfer by the lessee. The right of allotment necessarily carries with it the right to eject if the tenant is liable to ejected. We must therefore, hold, in agreement with the District Judge, that the notice to quite given by the plaintiff was a proper notice. I am not able to appreciate the contention that the above passage helps defendant in this case.
(26) Learned Senior Counsel for the defendants relied upon the decision of the Lahore High Court in Parbhu Ram v. Tek Chand, Air 1919 Lahore 31. The Lahore High Court had held "the Rule of English law that the person entitled to the immediate reversion of the demised premises is the proper person to give notice to quit is applicable to India." That is not the position here.
(27) The learned Senior Counsel brought to my notice the decision of the Supreme Court in G.Ponniah Thevar v. Nalleyam Perumal Pillai and Ors., wherein the Supreme Court has held: "cultivating tenant inducted into the possession by a person holding life estate in the land also entitled to protection of the notwithstanding Cultivating Protection Act, 1955." This case does not apply to the facts of the instant case.
(28) Learned Senior Counsel relied upon the decision of the Bombay High Court in M/s Mohan Sons (Bombay)Pvt. Ltd v. Lady Jamsetji Jejeebhoy and Ors., wherein the Bombay High Court has held a person merely receiving the rent though the landlord within the meaning of Section 5(3) cannot terminate the tenancy. A question arose whether the Secretary of the Trust could file a suit for possession on the basis of a notice issued by the Secretary on the strength of verbal instructions given by one of the plaintiffs. The Bombay High Court had relied upon the judgment of the Gujarat High Court in Nandlal Girdharlal and Another v. Gulamnabi Jamalbhai Motorwala and Ors., . The Bombay High Court held : that the Secretary who issued notice was not a landlord and in that capacity was not competent to terminate the tenancy and institute ejectment proceedings. The question becomes academic and I do not want to dilate further on this because the position in the instant case is entirely different.
(29) The learned Senior Counsel relied upon the judgment of the Gujarat High Court in Faizu bhai Mahmad bhai v. Balkrishna Naradlal Bhatt, . In para 22 the Division Bench held that a person entitled to receive rent on behalf of any person is a landlord within the meaning of the Section. The Division Bench dealt with Section 4(1) of the Saurashtra Rent Control Act (22 of 1951) the Bench held that the expression has been used in a wider sense. This decision by the Division Bench was over-ruled by the Full Bench of the same High Court in Nanalal Girdharpal and Another v. Gulamnabi Jama bhai Motorwala, 1973 Gaj page 131. The Full Bench dealt with Section 5(3) of the Bombay Rents, Hotel and Lodging House Rates Control Act (57 of 1947). The Full Bench held : We are, therefore, of the view that the extended meaning of the word "landlord" given in the definition in Section 5, Sub-Section (3) cannot be protected into Section 12 and Section 13, Sub-Section (1). The landlord referred to in Section 12 and Section 13 /Sub-section (1) is not a landlord as defined in Section 5, Sub-section (3) but a landlord who is entitled to possession of the premises on determination of the tenancy under the ordinary law of landlord and tenant. A co-owner receiving rent on behalf of himself and the other co owners or a rent-farmer or a rent-collector is, therefore, not entitled to recover possession of the premises let to a tenant on the strength of the artificial definition of "landlord" in Section 5 Sub-section (3). The decisions of S.H. Sheth, J. in (1971 ) 12 Guj. Lr 241 (Supra) and J.M. Sheth and B.K. Mehta, JJ. in F. Mahmadbhai v. P.N. Bhatt (supra) which have taken a different view do not in our opinion, represent the correct law and we must with the greatest respect to those learned Judges express our disagreement with them. We may also mention that for the same reasons we cannot agree with the view taken by S.M. Shah, J. in Mishrimal Chhogalal v. N.B Patel, where the learned Judge seems to have held that even a pe(1962) 65 Bom. Lr 1S PERrson who is not a "Landlord" given in the definition can give notice to quit determining the tenancy. This view, with the greatest respect to the learned Judge, is manifestly wrong for the Rent Act does not deal with the subject of termination of tenancy and there is no provision in the Rent Act providing for termination of tenancy in which the definition of "landlord" can be read so as to empower a mere receiver of rent to determine the tenancy. This judgment of the Gujarat High Court has been explained by the same High Court in Air 1977 Guj. 48. The Bombay High Court declined to follow the Gujarat High Court decision in view of the decision of the Supreme Court in Smt. Kanta Goel v. P. Pathak and Ors., .
(30) Learned Senior Counsel Mr. Arun Jaitley has relied upon the passage in Vol. 50 American Jurisprudence Second Edition page 99 wherein the statement of law is in the following terms : Whereas the lessee is entitled to notice to quit from his lessor, he is entitled to such notice from one to whom the lessor transfers reversion.
(31) I reflected on the arguments of the learned Counsel and I feel the real point is whether the plaintiff who is still the owner of the property could be non-suited on the plea put forth by the defendants. The silence or acquiescence of the agreement vendee may appear to be intriguing and enigmatic. But I think that they are supporting the plaintiff. The reason is simple if the plaintiff gets possession of the property it will be easy for the agreement vendee to have a physical possession of the respective portion agreed to be sold to them. Each portion has to be segregated by metes and bounds as the things stand at present. The agreement(vendee) do not have any interest in the property.
(32) The defendant is not entitled to the protection under the Delhi Rent Control Act, 1958. Therefore, the defendant cannot resist the suit for possession by the plaintiff.
(33) The defendant has not challenged the notice to quit. The only argument was, as I had noticed that the plaintiff had no right to issue notice as the plaintiff is not the landlord. Here is a case where the landlord has terminated the tenancy by issuing notice as required under law and the claim of the plaintiff for possession cannot be denied by the defendant.
(34) The argument on behalf of the defendant that the defendant should be given an opportunity to lead evidence on a few facts cannot be accepted because all the facts necessary to effectively adjudicate on the rights of the parties are admitted. Two issues are answered in favour of the plaintiff. Consequently the suit is decreed as prayed for with costs. Decreed.